| CHICAGO, April 26
CHICAGO, April 26 U.S. soybean crushers are
running at reduced capacities and bidding record premiums for
beans from tight-fisted farmers as demand for protein-rich
animal feed has shown few signs of slowing down amid port
congestion during bumper harvests in South America, processors
and traders said on Friday.
Big processors such as Archer Daniels Midland Co,
Bunge Ltd and Cargill Inc that crush soybeans
and then sell meal and oil have struggled to buy beans from
farmers who refuse to sell any leftovers from last year as a
price hedge against the possible return to drought conditions.
Farmers sold their beans for as much as $17 per bushel at
harvest last autumn after the worst drought since the Dust Bowl
sapped yields. Prices are now hovering between $14 and $15 and
growers are holding out for more money.
"It's extremely tight. We don't have any beans bought," said
Ronnie Edge, the marketing manager at Owensboro Grain Co, a
soybean processing plant along the Ohio River in Kentucky.
Owensboro Grain is running only one of its two soybean
extractors at the facility, Edge said, while a plant owned by
Bunge in Morristown, Indiana, is also said to be running at half
capacity. Bunge, the agribusiness company based in White Plains,
New York, earlier this month shut down a plant in Emporia,
Kansas, until the autumn harvest.
Soren Schroder, who will take over as Bunge chief executive
on June 1, warned in a conference call this week that port
congestion in Brazil could lead to lingering tightness in
soybean and corn supplies in the United States.
Basis bids, or the amount above or below CBOT futures that
dealers are willing to pay for beans, are at their highest ever
for this time of year at most U.S. soy processors and are
approaching the all-time highs seen during the summer of 2009,
another year of historically tight supplies.
Bids typically hit their seasonal highs when supplies
dwindle in the weeks before harvest. The sharp gains so early
this year portend the likelihood of record basis levels this
summer, experts said.
Soy futures declined to a 10-month low this month at
the Chicago Board of Trade on expectations of big global
production. The downturn in futures forced dealers to boost
basis bids to make up the difference in the flat cash price.
"Cash is as hot as I have ever seen it this time of year,"
said Charlie Sernatinger, an analyst at ABN Amro in Chicago and
market veteran of 37 years.
The soy basis in Decatur, Illinois, where ADM has its
headquarters, rose to $1.10 per bushel above futures this week,
compared with just 12 cents a year ago. Bids there hit a record
of $2.15 above futures in mid-September 2009, Reuters data
Brazil is expected have a record-large crop and overtake the
United States as the world's top soy producer. Argentine, the
top exporter of soy products meal and oil, is also gathering
their largest crop in four years.
But port delays in Brazil are as long as two months, while
Argentine farmers are holding their supplies, with domestic
financial uncertainty prompting them to save in soybeans rather
U.S. SOYMEAL EXPORTS NOT LETTING UP
So even as cash prices for soy plunges in South America,
foreign importers are turning to the United States, where mature
port infrastructure can allow shippers to more speedily
transport cargoes around the world.
With six months remaining in the soymeal marketing season
that ends on Sept. 30, U.S. exporters have already committed to
deliver 8.58 million tonnes of meal, while the U.S. Agriculture
Department is forecasting 8.48 million tonnes for the entire
Exporters expect some buyers to cancel deals with U.S.
shippers as more supplies become available from South America,
but that has yet to happen.
Meanwhile, traders in the United States are reluctant to
offer soymeal because bean supplies are so tight after last
summer's drought reduced yields, bringing the current stockpile
to the smallest in at least nine years.
"This is certainly unsustainable because of the bean supply,
but the trade continues to be surprised each Thursday with the
export announcement," a soymeal export trader said.
Edge, in Kentucky, said he was hopeful of taking delivery of
soybeans from the Chicago futures market. But with cash bids so
high, little to no deliveries against futures were expected by
traders on first notice day for May contracts next week.
Still, farmers could sell some of what remains from last
year's harvest once they sow this year's crop. Soy plantings are
expected to begin next month in the U.S. Midwest.
"We will stay hot into the beginning of June," the analyst
Sernatinger said. "The farmers will get comfy with their new
crop and unload."